(Translation)

Matters to be disclosed on the Internet
pursuant to laws and ordinances and the Articles of Incorporation

Systems to Secure the Properness of Business Activities(Fundamental Policy to Establish its Internal Control Systems)
Fundamental Policy on Control of Joint-Stock Corporation
Notes to Consolidated Financial Statements
Notes to Non-Consolidated Financial Statements

For the Fiscal Year 2014
(December 1, 2013 to November 30, 2014)

Kewpie Corporation
These matters are made available by publication on the Internet website of the Company
pursuant to laws and ordinances and its Articles of Incorporation.
(http://www.kewpie.co.jp/company/ir/stocks_information03.html)* The contents of the notes to consolidated financial statements and the notes tonon-consolidated financial statements are those audited by the account auditors as ofJanuary 19, 2015.

Systems to Secure the Properness of Business Activities:
The Company has adopted a resolution with regard to its "Fundamental Policy toEstablish its Internal Control Systems", as described below:(1)

General introduction

The resolution provides for the fundamental policy of the Company on its internal
control systems as adopted by its Board of Directors pursuant to Article 362, paragraph 5 of
the Companies Act of Japan, as well as an outline for the provisions required for establishingsuch systems as stipulated in Article 100 of the Regulations for the Enforcement of theCompanies Act of Japan.
The internal control systems pursuant to the resolution are contemplated to be
implemented swiftly and improved by periodic and timely reviews, whereby establishingefficient and lawful corporate systems.
(2)

(i)

Systems to secure the execution by the Directors of their duties to comply with laws
or ordinances and the Articles of Incorporation
The Company has advocated the following motto and precepts as its spirit offoundation and cultivated its corporate culture through its continued efforts to educate
its officers and employees about the spirit and develop awareness thereof among themfor years. The Directors must pay serious attention to the corporate culture in
making management decisions.
The Company's motto:

Share the joy of endeavors

The Company's precepts:

 Value moral;
 Endeavor to innovate; and Respect your parents(ii) The Company has stipulated compliance rules so that its Directors and employees canact in compliance with laws or ordinances, the Articles of Incorporation and the spiritof foundation and management philosophy of the Company. The Company also has
stipulated and publicized a code of ethics and conduct for the Group, with which its
Directors shall be obligated to comply.
(3)

(i)

Systems concerning storage and management of information on the execution by the
Directors of their duties
Pursuant to the document management rules, corporate information handling rules,
basic personal information protection rules and respective management manuals
relating thereto, the Director in charge of the Operation Promote Department shallproperly store and manage (and destroy) documents concerning the execution by the
Directors of their duties and other information, in written or electronic form. The-1-situations of management shall be verified and such rules and manuals shall berevised, whenever necessary.
(ii) The Directors and Corporate Auditors shall have access to such information, written
or electronic, at all times.
(4)(i)

Regulations concerning management of exposure to the risk of loss and other systems
In accordance with the master risk management regulations of the Company,
individual risks shall be continuously monitored by its relevant divisions and withregard to risks to the Company as a whole, information shall be collected unilaterally
by the Risk Management Committee chaired by the Representative Director, whichshall generally manage such risks, including the evaluation and prioritization thereof.

(ii) The Internal Auditing Department shall, in cooperation with self-audit staff in chargeof qualities, environments, safety, etc., audit the situations of daily risk management
by each division and department and periodically report to the Risk Management
Committee, the Board of Directors and the Board of Corporate Auditors mattersconcerning risk management and the current status of development of the risk
management systems of the Company.
(iii) In accordance with the master risk management regulations, the Company shallprepare risk management manuals and establish systems to convey information
quickly and properly and take swift action in case of an emergency, by assuming andcategorizing specific risks in advance.
(5)(i)

Systems to secure efficient execution by the Directors of their duties
The Company will set up a company-wide target to be shared by the Directors andemployees and get it across among them and also formulate an optimal system toachieve the business target and the President and Representative Director shallappoint personnel responsible for each business sector in accordance with resolutionsof the Board of Directors. By delegating authorities to such personnel, the Company
will pursue efficient and swift execution of business.

(ii) With regard to execution of business in accordance with the resolutions of the Boardof Directors, the scope of responsibilities of Directors and personnel and procedures
for making final decisions shall be established in a schedule of procedures for making
final decisions and filing reports.
(iii) Specific measures to promote management activities shall, in accordance with thefundamental policy on execution of business determined by the Board of Directors, beleft to discussions on ordinary and extraordinary bases by the Management Council,
an advisory organ to the President and Representative Director, to ensure
decision-making and expedient execution of business.
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(6)

(i)

Systems to secure the execution by the employees of their duties to comply with laws
or ordinances and the Articles of Incorporation
The Company will establish provisions for compliance systems and set up a code of
conduct so that all officers and employees can act in compliance with laws orordinances and the Articles of Incorporation, as well as the Company's motto andprecepts. In addition, to ensure their strict compliance, the Company will appoint an
officer responsible for compliance to preside over the Compliance Committee. Thus,
the Company will exert its efforts to improve its company-wide compliance systems
and grasp any problems involved therein and make the committee, among others, set
up compliance manuals and train employees. These activities shall be reported
periodically by the officer responsible for compliance to the Board of Directors andthe Board of Corporate Auditors.

(ii) As a whistle blower system under the control of the Compliance Committee to protect
whistle blowers, the Company will set up a "helpline" with independent attorneys andthird-party institutions as information recipients.
Whenever the Compliance
Committee receives a report or notice from the information recipients, it shallinvestigate the same. If any violation is found, it shall, upon consultation with therelevant division, decide on a preventive measure and disclose the same, as well as theresult of punishment, within the Company and implement such preventive measurecompany-wide.
(7)

(i)

Systems to secure the properness of business activities of the corporate group
comprising the Company and its parent company and subsidiaries
To secure the properness of business activities of the group companies, the Company
will institute a management philosophy of the Group of "Creating an Appealing
Company That Responds to People's Trust and Expectations" as its goal, and set up acommon code of ethics and conduct for the Group and share consolidated
management targets and business management policies as a corporate group throughthe Group Management Promotion Council. With regard to execution of business,business of the subsidiaries shall be managed in accordance with a "group schedule ofprocedures for making final decisions and reports".

(ii) A Management Advisory Board shall be created as an advisory organ for the President
and Representative Director of the Company to obtain advice and recommendations
so that the Group may maintain and strengthen its health, fairness and transparency,
which shall be reflected in his decision-making.
(iii) Each subsidiary of the Company shall file with the Directors of the Company a reporton operating results and managerial risks on a monthly basis. In addition, any
director of a subsidiary appointed by the Company who has attended a meeting of theboard of directors of such subsidiary shall file a report on the situations of discussions
thereat and managerial problems with the officers and employees designated by the
President and Representative Director of the Company.
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(iv) The Risk Management Committee of the Company shall include representatives of its
subsidiaries as its members and manage risks of the subsidiaries. The Company's
Compliance Committee, internal-audit divisions and helpline shall also cover thesubsidiaries.
(v) The Company and its subsidiaries, as members of society, shall enter into noconnection with any antisocial force that poses any threat to the social order andsafety, and definitely reject any undue demand.
(vi) To establish systems to secure the properness of financial reporting, the Group shallstipulate relevant rules and regulations and give education and awareness for thecompliance with accounting standards and other relevant laws or ordinances toenhance internal control over financial reporting. In addition, the relevant
departments and divisions and the corporate auditors of the group companies shallcooperate with each other to establish a scheme to periodically evaluate thedevelopments of the improvement and operation of the systems thereof and improvethem.
(vii) With K.R.S. Corporation and Aohata Corporation, subsidiaries of the Company, theCompany shall share consolidated management targets and closely exchange
information on risk management and compliance. Simultaneously, as each of thesubsidiaries is a company listed on the Tokyo Stock Exchange and forms its own
corporate group, it shall institute a system of its own to secure the properness ofbusiness activities.
(8)

Matters concerning the assignment of employees to assist the Corporate Auditors to
execute their duties

The Internal Auditing Department shall conduct internal audits of such matters asrequested by the Corporate Auditors upon consultation with the Board of Corporate Auditors
and file a report on the results thereof with the Board of Corporate Auditors. In addition, inthe event that the Board of Corporate Auditors requests the Company to assign its employees
to assist the Corporate Auditors to execute their duties, the Company shall accommodate such
request promptly.
(9)

Matters concerning the independence from the Directors of employees to assist the
Corporate Auditors to execute their duties

Any employee in the Internal Auditing Department who is requested by the Corporate
Auditors to conduct required internal audits shall not be instructed or ordered with regard tosuch internal audits by any Director other than the Director in charge of the Internal Auditing
Department. In the event that the Board of Corporate Auditors requests the Company toappoint an employee to assist them to execute their duties, such any employee shall not be
instructed or ordered by any Director to remain independent.
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(10)

System for reports by Directors and employees to the Corporate Auditors and othersystems for reporting to the Corporate Auditors(i)

The Directors and employees shall, in accordance as provided for by the Board of
Corporate Auditors, give necessary reports upon request from each Corporate Auditor.

(ii) The matters to be reported under item (i) above principally include:

(11)
(i)

・

Details of propositions to be submitted to the General Meeting of Shareholders
for resolution;・State of activities of the divisions responsible for establishing internal control
systems of the Company;

・State of activities of the corporate auditors, the internal auditing departments
and self-audit staff of the subsidiaries and affiliated companies of the Company;

・Important accounting policies and accounting standards of the Company andamendment thereto;・

Details of publications of operating results and forecasts thereof and the details
of important disclosure documents; and・Management of the whistle blower system and the details of notices.

Other systems to assure effective audits by the Corporate Auditors
The Board of Corporate Auditors shall have opportunities to have talks with theexecutive Directors and important employees and also have opportunities to exchange
opinions with the President and Representative Director and the account auditors,
respectively, on a regular basis.

(ii) The Risk Management Committee, Compliance Committee and other committees
involved in internal control, the Internal Auditing Department and self-audit staff shallgive their fullest attention to the opinions of each Corporate Auditor on assuring theeffectiveness of audits by the Corporate Auditors.

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The corporate governance system of the Group is summarized as follows:
General Meeting of Shareholders
Management
andMonitoring

Election

ReportAccount
Audit

Election

Corporate Auditors Cooperation
Board of Corporate
Auditors

Directors
Board ofDirectors

ReportElection

ReportAudit

Account
Auditors

Report
Audit

ReportAppointment/supervision

Advice/proposal

Management
Advisory Board

President and Representative Director

ExecutionofBusiness

Consult

Management Committee
ReportInternal Control
andRisk Management

Response
Cooperation

Instructionordersupervision

Legal counsels, certified
tax accountants andother professionals

Cooperation

Referral/report

Advice/guidance

Audit

Executive Directors, Corporate Officers, business divisions,subsidiaries

Risk Management
Committee

Compliance
Committee
Helpline-6-

Information Security
Committee

Internal
Auditing
Department

Fundamental Policy on Control of Joint-Stock Corporation(1)

Fundamental policy on what the person(s) should be like to control the determinationof the financial and business policy of the Company

The Company considers that in the event that its shares are to be purchased for the
purpose of mass acquisition, it should be left to final judgment of the shareholders whether or
not the Company will agree thereto, and does not deny any import or effect of vitalization of
its corporate activities through a change in the controlling interest.
However, for the management of the Company and the Group, it is essential to havea good understanding of a broad range of know-how and accumulated experience, as well as
the relationships fostered with its stakeholders, including customers, trading partners andemployees, among others. Without such good understanding, it would be impossible toproperly judge the shareholder value that may be raised in the future. We, who areresponsible for management as entrusted by the shareholders, have focused our efforts on IR
activities to get the fair value of the shares of the Company understood by the shareholders
and investors. However, in the event of a sudden mass acquisition of the shares, for theshareholders who are required to properly judge whether the price for the acquisition offeredby the purchaser is adequate or not in a short period, we consider it vital to be provided withadequate and sufficient information from both the purchaser and the Board of Directors of theCompany. Additionally, for the shareholders in considering whether or not to continue
holding the shares of the Company, we believe that such information as the impact of theacquisition on the Company, the details of the management policy and business plans and past
investing activities of the purchaser when the purchaser proposes to participate in the
management of the Company and the opinion of the Board of Directors as to the acquisition
will be important for making a decision.
In consideration of these factors, we have judged that any prospective purchaser ofthe shares of the Company for the purpose of mass acquisition should be required to provide
with the Board of Directors in advance such necessary and sufficient information as to allow
the shareholders to consider the acquisition in accordance with some reasonable rules
prescribed by the Company and publicized in advance, and to be able to commence theacquisition only after the lapse of a specified evaluation period for the Board of Directors.
In fact, some mass acquisition may cause permanent damage to the Company andmaterially injure its corporate value and the common interests of its shareholders. We,
responsible for the management of the Company, recognize that we are naturally responsible
for protecting against such mass acquisition the fundamental philosophy and brands of theCompany and the interests of its shareholders and other stakeholders.
To fulfill such responsibility, the Board of Directors of the Company recognizes thatwith regard to any purchase of shares for the purpose of mass acquisition (or any proposed
purchase), it is necessary to carefully investigate and judge the effect of such purchase (orsuch proposed purchase) that may have on the corporate value of the Company and thecommon interests of its shareholders, in consideration of the nature of business, futurebusiness plans and past investing activities of the purchaser, among other factors.

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Hence, we believe that to protect the corporate value of the Company and thecommon interests of its shareholders, it is necessary for the Board of Directors to takemeasures it considers adequate in accordance with some reasonable rules prescribed by theCompany and publicized in advance.
The aforementioned fundamental policy on what the person(s) should be like tocontrol the determination of the financial and business policy of the Company will be referred
to as the "Fundamental Policy" hereinafter.
(2)

(i)

Special measures to facilitate the implementation of the Company's Fundamental
PolicySpecial measures to facilitate the implementation of the Company's Fundamental
PolicyTo encourage many investors to invest in the Company on a continued, long-termbasis, it has implemented the following measures to facilitate the enhancement of its
corporate value and the common interests of its shareholders:(a)Institution of the Group's medium-term business plan
The Group has instituted a medium-term business plan for three years
commencing December 1, 2012 to further enhance its corporate value.
In the medium-term business plan, the Group, with the aim of cultivating aculture of challenging by the Group as one and ensuring continued growth inJapan together with significant growth overseas, has instituted four management
policies (strengthening our management base, innovation in Japan, developing
overseas business in earnest and laying a foundation for the future) round upon"making the most of our unique capabilities and an ability to create new
products, markets, and demand".
To put the medium-term business plan into action, the Group will makeaggressive business and equipment investment to strengthen its
revenue-generating base and enhance asset efficiency in each business divisionround upon the above-mentioned management policies, which we believe will
facilitate the enhancement of its corporate value and the common interests of its
shareholders.

(b)Upgrading of corporate governanceTo continuously increase its corporate value and the common interests of its
shareholders through efficient and sound management, the Group regards the
upgrading of its organizations, schemes and systems of management and timely
and proper implementation of necessary measures as one of the most importantmanagement challenges.

-8-

To more clearly define the management responsibility for each fiscal year andestablish a management structure that can respond to changes in the businessenvironments with agility, the Company has set the term of office of Directors to
one year. Additionally, to further strengthen its audit system, the Company has
employed a system of five Corporate Auditors, including three outside Corporate
Auditors.
(ii)

Opinion of the Board of Directors of the Company about the measures set forth in (2)(i) above and the reason for the opinion
The Board of Directors is of the opinion that the measures implemented under (2) (i)(a) and (b) above comply with the Fundamental Policy because both measures will
enhance the corporate value of the Group and the common interests of its
shareholders and consequently, mitigate the risk of the emergence of any Large
Purchaser who might materially injure the corporate value of the Company and thecommon interests of its shareholders. The Board of Directors also is of the opinion
that the measures apparently are not contemplated to maintain the position of theofficers of the Company because the measures will enhance the corporate value of
the Group and not injure the common interests of the shareholders of the Company.

(3)

(i)

Measures to prevent the determination of the financial and business policy of theCompany from being controlled by any inadequate person in consideration of theFundamental Policy (a defense plan against large purchase actions of the shares of
the Company (takeover defense plan))
Measures by a defense plan against large purchase actions of the shares of theCompany (takeover defense plan)
The Company, at the meeting of its Board of Directors held on January 24, 2014,
determined to maintain the Fundamental Policy and continue the defense plan against
large purchase actions of the shares of the Company (the "Defense Plan") as
measures to prevent the determination of the financial and business policy of theCompany from being controlled by any inadequate person in consideration of theFundamental Policy, subject to approval of the shareholders at the 101st Ordinary
General Meeting of Shareholders to be held on February 25, 2014, at which themaintenance and continuation of the Defense Plan was approved.
The summary of the Defense Plan are as set forth below:(a)Purchases of shares subject to the coverage of the Defense Plan(i) A purchase of shares and other securities of the Company to make the ratio ofvoting rights of any specified shareholder group 20% or more, or (ii) a purchaseof shares and other securities of the Company resulting in making the ratio ofvoting rights of any specified shareholder group 20% or more (whether bymarket trading, by TOB or otherwise, excepting any purchase agreed to by the
Board of Directors in advance) shall be subject to the coverage of the Defense
Plan.

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(b)

Particulars of the Large Purchase Rules
The Company will institute Large Purchase Rules under which any Large
Purchaser can commence a large purchase action only after (1) it provides theBoard of Directors of the Company with necessary and sufficient information on
the large purchase action in advance and (2) in principle, 60 days (in case of apurchase of all of the shares of the Company by a TOB the consideration forwhich is only cash (in the yen)) or 90 days (in cases of other large purchaseactions) should be allowed to the Board of Directors as a period for its
evaluation, deliberation, negotiation, formulation of an opinion, preparation ofan alternative proposal, determination of the necessity to follow procedures forconfirming the intention of the shareholders and determination of whether nor
not to trigger the Defense Measure (the "Directors' Evaluation Period") elapse.
With regard to the Large Purchase Rules, the Company will (3) establish an
Independent Committee to ensure the Defense Plan to be implemented properly
and prevent arbitrary judgments by the Board of Directors as far as possible and(4) follow procedures for confirming the intention of the shareholders as thenecessity arises from the perspective of respecting their intention. The
Independent Committee shall consist of at least three members, who shall be
appointed from among outside experts independent of the management
responsible for execution of business of the Company, outside Directors of theCompany and outside Corporate Auditors of the Company, to enable them tomake fair and indifferent judgments. To confirm the intention of theshareholders, a resolution shall be adopted at a general meeting of shareholders("General Meeting of Shareholders") under the Companies Act of Japan. In theevent that such General Meeting of Shareholders is held, the Board of Directors
shall, pursuant to the resolution adopted thereat, trigger, or not trigger, theDefense Measure against the proposed large purchase action as the case may be.
The date of the General Meeting of Shareholders shall be fixed within theinitially fixed Directors' Evaluation Period, in principle. However, in any
unavoidable circumstance where it takes time procedurally to convene a General
Meeting of Shareholders or otherwise, the Board of Directors may extend the
Directors' Evaluation Period for 30 days upon recommendation from the
Independent Committee.

(c)Defense Measure when a large purchase action is taken
a. In case the Large Purchaser observes the Large Purchase Rules
In case the Large Purchaser observes the Large Purchase Rules, the Board of
Directors will not trigger the Defense Measure against the large purchase action,in principle. Whether or not to agree to the purchase proposal by the Large
Purchase will be left to the judgment of the respective shareholders.
However, if the Large Purchaser is considered not to seriously aim forreasonable management but the large purchase action of the Large Purchaser isconsidered to cause permanent damage to the Company, whereby materiallyinjuring its corporate value and the common interests of its shareholders, the- 10 -

Board of Directors may exceptionally implement any appropriate measure toprotect the interests of its shareholders.
b. In case the Large Purchaser does not observe the Large Purchase Rules
In case the Large Purchaser does not observe the Large Purchase Rules, in orderto protect the corporate value of the Company and the common interests of its
shareholders, the Board of Directors will trigger the Defense Measure, including
the issuance of stock acquisition rights, as authorized by the Companies Act andother laws or ordinances and the Articles of Incorporation of the Company,
against the large purchase action by taking into consideration the necessity andadequacy thereof. The Board of Directors will determine whether or not theLarge Purchaser observes the Large Purchase Rules and whether or not it isappropriate to trigger the Defense Measure, by reference to the opinions ofthird-party experts and by respecting recommendations from the Independent
Committee to the maximum extent possible.
c. Vehicles for the Defense Measure
A specific vehicle for the Defense Measure shall be selected by the Board of
Directors from among those authorized under the Companies Act and the
Articles of Incorporation of the Company, including the free allocation of stockacquisition rights as the most appropriate vehicle in its judgment when it istriggered, by taking into consideration the necessity and adequacy thereof. In
the event that the Board of Directors selects the free allocation of stockacquisition rights, it shall be included in the conditions of stock acquisitionrights that the Large Purchaser shall not be allowed to exercise the stockacquisition rights.
d. Cessation of the triggering of the Defense Measure
Even after the determination to trigger the Defense Measure, in the event that theLarge Purchaser revokes or alters the large purchase action or otherwise theBoard of Directors judges it inappropriate to trigger the Defense Measure, it mayalter or cease the triggering of the Defense Measure by respecting
recommendations from the Independent Committee to the maximum extent
possible.
(d)

Impacts on the shareholders and investors

a. Impact of the Large Purchase Rules on the shareholders and investors
We believe that the institution of the Large Purchase Rules, which are intended
to help the shareholders make appropriate investment judgments, will benefit theshareholders of the Company and investors.

- 11 -

b. Impact on the shareholders and investors when the Defense Measure is triggered
In case the Large Purchaser does not observe the Large Purchase Rules, theBoard of Directors may trigger the Defense Measure, as authorized by theCompanies Act and other laws or ordinances and the Articles of Incorporation of
the Company, to protect the corporate value of the Company and the common
interests of its shareholders. However, under the scheme of the Defense
Measure, it is not assumed that the shareholders (excluding the Large Purchaser
against which the Defense Measure is triggered) of the Company will incur any
specific loss on their legal rights or economic interests. In the event that theBoard of Directors ceases to issue stock acquisition rights or acquire the issued
stock acquisition rights without consideration, the stock value per share will not
be diluted. Hence, any shareholder or investor who trades in the shares,
assuming that the stock value of the Company will be diluted on or after the exdate relating to the free allocation of stock acquisition rights may incur an
unexpected loss due to stock price movements.
c. Procedures to be followed by the shareholders when the Defense Measure is
triggered
In the event that the Board of Directors determines to make a free allocation ofstock acquisition rights as a vehicle for the Defense Measure, the stockacquisition rights will be allocated free of charge to the shareholders recorded in
the final register of shareholders of the Company as of the record date for thefree allocation of the stock acquisition rights of which the Company shall give
public notice. Therefore, the shareholders will have to be recorded in the final
register of shareholders as of the record date. Furthermore, for details of themethods of allocation, the registration of transfers of shares, the exercise ofstock acquisition rights and the acquisition thereof by the Company, information
will be disclosed or notified to the shareholders after the determination of theBoard of Directors with regard to the Defense Measure.
(e)Effective period of the Defense Plan
The effective period of the continued Defense Plan shall expire at the close of
the 104th Ordinary General Meeting of Shareholders to be held no later thanFebruary 28, 2017.

(ii)

Opinion of the Board of Directors of the Company about the measures set forth in (3)(i) above and the reason for the opinion(a)

The Defense Plan's compliance with the Fundamental Policy
The Defense Plan stipulates the particulars of the Large Purchase Rules, thedefense plan in case of a large purchase action, the establishment of an
Independent Committee and the impacts on the shareholders and investors,
among other things.

- 12 -

The Defense Plan requires any Large Purchaser to provide the Board of
Directors with necessary and sufficient information on a large purchase action inadvance and commence the large purchase action only after the lapse of the
Directors' Evaluation Period and stipulates that the Board of Directors may
trigger any defense measure against the Large Purchaser not observing the Large
Purchase Rules.
The Defense Plan also stipulates that even in the event that the Large Purchaser
observes the Large Purchase Rules, if its large purchase action is considered by
the Board of Directors to materially injure the corporate value of the Company
and the common interests of its shareholders, the Board of Directors may trigger
any defense measure considered appropriate to protect the corporate value of theCompany and the common interests of its shareholders.
Hence, we believe the Defense Plan complies with the Fundamental Policy.
(b)

The Defense Plan's not injuring the common interests of the shareholders of theCompany
As described in "Fundamental policy on what the person(s) should be like tocontrol the determination of the financial and business policy of the Company"in (1) above, the Fundamental Policy is based on respect for the common
interests of its shareholders. The Defense Plan, which is designed according to
the philosophy of the Fundamental Policy, is intended to afford the opportunities
to the shareholders of the Company to receive information necessary for them tojudge whether or not to agree to a large purchase action, have the Board of
Directors put forward its opinion thereon and have any alternative proposal
offered to them. The Defense Plan will allow the shareholders of the Company
and investors to make appropriate investment judgments. Thus, we believe thatthe Defense Plan will not injure the common interests of the shareholders of theCompany but rather benefit their interests.
In addition, the effectuation and extension of the Defense Plan is subject to theapproval of the shareholders. The Defense Plan has no "dead-hand clause" (aclause that prevents triggering a takeover defense measure if any member of theboard of directors that adopted the measure is replaced) or "slow-hand clause" (aclause that prevents triggering a takeover defense measure for a specified period
even if a majority of the members of the board of directors that adopted themeasure are replaced) and consequently, the shareholders of the Company canabolish the Defense Plan whenever they wish to do. Thus, we believe that the
Defense Plan gives assurance that the common interests of the shareholders of
the Company will not be injured.

(c)

The Defense Plan's not contemplated to maintain the position of the officers of
the Company
Based on the principle of leaving the final judgment to the shareholders of theCompany as to whether or not to agree to a large purchase action, the Defense
Plan allows the Board of Directors to request compliance with the Large- 13 -

Purchase Rules and trigger a defense measure to the extent necessary to protect
the corporate value of the Company and the common interests of its shareholders.
The Defense Plan discloses the conditions on the triggering of defense measuresby the Board of Directors in advance and in details and any defense measure by
the Board of Directors shall be triggered in accordance with the provisions of the
Defense Plan. The Board of Directors cannot effectuate or extend the Defense
Plan by itself, but subject to the approval of the shareholders of the Company.
In addition, to trigger a defense measure against a large purchase action, theBoard of Directors shall seek advice from third-party experts whenevernecessary in making any important decision on the Defense Policy, and consult
with the Independent Committee consisting of the members independent of the
management responsible for execution of business and respect recommendations
from the Independent Committee to the maximum extent possible.
Furthermore, the Board of Directors can follow procedures for confirming theintention of the shareholders as the necessity arises from the perspective ofrespecting their intention. The Defense Plan contains procedures to ensure theproper operation thereof by the Board of Directors.
Thus, we believe that the Defense Plan clearly is not contemplated to maintainthe position of the officers of the Company.

- 14 -

Notes to Consolidated Financial Statements
I.

Notes on the matters forming the basis of preparation of consolidated financial statements

1.

Consolidated subsidiaries
The Group has fifty-two consolidated subsidiaries in the current fiscal year. The
significant consolidated subsidiaries are Kewpie Egg Corporation, Deria Foods Co., Ltd.,
Kewpie Jyozo Co., Ltd., K.R.S. Corporation, Kanae Foods Co., Ltd., Gourmet Delica Co.,
Ltd. and SALAD CLUB INC. In the current fiscal year, Green Message Co., Ltd.,
which was newly incorporated, and Tou Kewpie Co., Ltd., in which the Company
acquired additional shares, were added to the consolidated subsidiaries but one subsidiary
was excluded from the consolidation as a result of the merger of consolidated subsidiaries
Hanshin Delica Co., Ltd. and Kayaka Co., Ltd.
Among the fifteen non-consolidated subsidiaries, the principal one is Asato Logistics
Corporation. These companies are excluded from the consolidation, because theiramounts of total assets, net sales, net income (based on the Company's ownership
percentage) and earned surplus (based on the Company's ownership percentage) do nothave a significant effect on the consolidated financial statements.

2.

Application of the equity method
The equity method is applied to the investments in five affiliated companies. The
significant affiliates under the equity method are Aohata Corporation and Summit Oil
Mill Co., Ltd. In the current fiscal year, Tou Kewpie Co., Ltd., in which the Company
acquired additional shares to make it a consolidated subsidiary, is excluded from theapplication of the equity method.
The investments in Asato Logistics Corporation and 14 other non-consolidated
subsidiaries, as well as Tohoku Aohata Co., Ltd. and four other affiliated companies,
which are not accounted for by the equity method, are excluded from the application of
the equity method, because the amounts of net income or loss (based on the Company's
ownership percentage) and earned surplus (based on the Company's ownership
percentage) do not have a significant effect on the consolidated financial statements.

3.

Fiscal years of consolidated subsidiaries
The date of the closing of accounts of Kewpie (Thailand) Co., Ltd., Beijing Kewpie
Foods Co., Ltd. and Hangzhou Kewpie Foods Co., Ltd. is December 31 of each year.
The date of the closing of accounts of Kifuki U.S.A. Co., Inc., Q&B Foods Inc.,
Henningsen Foods, Inc., Henningsen Foods, Netherlands Inc., Kewpie Malaysia Sdn.
Bhd., Kewpie Vietnam Co., Ltd. and PT. Kewpie Indonesia is September 30 of each year.
For the purpose of preparation of consolidated financial statements, Kewpie (Thailand)Co., Ltd., Beijing Kewpie Foods Co., Ltd. and Hangzhou Kewpie Foods Co., Ltd. areconsolidated based on their temporary financial statements as at September 30 and Kifuki
U.S.A. Co., Inc., Q&B Foods Inc., Henningsen Foods, Inc., Henningsen Foods,
Netherlands Inc., Kewpie Malaysia Sdn. Bhd., Kewpie Vietnam Co., Ltd. and PT.

- 15 -

Kewpie Indonesia are consolidated based on their financial statements at their balance
sheet date. Significant transactions for the period from October 1 up to November 30, if
any, are reflected in the consolidated financial statements.
4.
(1)

Accounting policies
Basis and method of valuation of significant assets(a) Securitiesi)

Held-to-maturity bonds are stated at amortized cost (by the straight-line
method).

ii)

Capital stocks of subsidiaries and affiliated companies not subject to the equity
method are stated at cost, determined by the moving average method.

iii) Other securities with market value are stated at market value, determined bymarket prices, etc. as of the closing of the fiscal year (Revaluation differences
are all transferred directly to capital. Selling costs are determined by themoving average method.). Those without market value are stated at cost,
determined by the moving average method.
(b) Derivatives
Stated at market value.
Hedge accounting is applicable to hedge transactions that meet the requirements
thereof.
(c) Inventories
Products and purchased goods, work in process, raw materials and supplies are
principally stated at monthly moving average cost (the value method to devaluate abook value for decreasing profitability). Some joint products are stated at costusing the retail method (the value method to devaluate a book value for decreasing
profitability).
(2)

Depreciation of significant depreciable assets(a) Tangible fixed assets (excluding lease assets)
Tangible fixed assets, other than those described below, are depreciated using thedeclining-balance method, principally.
The buildings (excluding the improvements thereof) acquired on or after April 1,
1998 are depreciated using the straight-line method.
The bases for periods of useful life and residual values are mostly identical withthose stipulated in the Corporation Tax Act of Japan.

- 16 -

(b) Intangible fixed assets (excluding lease assets)
Intangible fixed assets are depreciated using the straight-line method.
The bases for periods of useful life are mostly identical with those stipulated in the
Corporation Tax Act of Japan.
Software for internal use is amortized by the straight-line method on the estimateduseful life of internal use (five years).
(c) Lease assets
Finance lease transactions other than those which are deemed to transfer theownership of leased assets to lessees are calculated by the straight-line method byconsidering the lease period to be useful life and the scrap value to be zero.
Finance lease transactions other than those which are deemed to transfer theownership of leased assets to lessees, which started on or before November 30,
2008, are accounted for by the same method as that applied to ordinary operatingleases.
(d) Long-term prepaid expenses
Long-term prepaid expenses are depreciated using the straight-line method.
(3)

Method of treatment of significant deferred assets
Business commencement expenses are recorded as expenses in full at the time of
payment.

(4)

Accounting standards for significant allowances(a) Allowance for doubtful accounts
To provide for losses on bad debts, the Company sets aside an estimateduncollectable amount, by taking into consideration the possible credit loss rate in
the future based on the actual loss rate in respect of general credits, and theindividual possibilities of collection in respect of possible non-performing credits
and other specific claims.
(b) Reserve for sales rebates
To provide for payments for sales rebates to be incurred during the current fiscal
year, a reserve for sales rebates is provided based on an accrual basis inaccordance with each company's policy (rate of the estimated payments for sales
rebates to sales).

- 17 -

(c) Reserve for bonuses
To provide for the payment of bonuses to employees, the reserves for bonuses areprovided according to the expected amount of the payment which attributes to thecurrent fiscal year.
(d) Reserve for officers' bonuses
To provide for the payment of bonuses to officers, a reserve for officers' bonuses isprovided according to the estimated amounts payable at the end of the fiscal year
under review.
(5)

Accounting for retirement benefits(a) Periodic allocation method for projected retirement benefits
In calculating retirement benefit obligations, the method of allocating the projected
retirement benefits at the end of the current fiscal year is based on a straight-line
basis.
(b) Method of accounting for actuarial gains and losses and prior service costs
Prior service costs are amortized by the straight-line method over twelve years(except for from ten to thirteen years of K.R.S. Corporation) based on the averageremaining employees' service years.
Actuarial gains or losses are amortized by the straight-line method over twelve
years (except for from ten to thirteen years of K.R.S. Corporation) based on the
average remaining employees' service years at each fiscal year, and theiramortizations start from the next year of the respective accrual years.
In addition, if the amount of pension fund assets exceed that of retirement benefit
obligations for benefit pension plan, it is provided as assets for retirement benefits
on consolidated balance sheet.

(6)

Significant methods of hedge accounting(a) Deferral hedge is adopted in hedge accounting. Appropriation processing is
adopted for transactions that meet the requirements for that method. Special
processing is adopted for interest-rate swap transactions that meet the requirements
for special processing.
(b) Hedging instruments are forward exchange contracts and interest-rate swap
transactions.
(c) Hedged items are purchase transactions in foreign currencies and interest of loans.
(d) The Company enters into forward exchange contracts to hedge risks fromfluctuations in foreign exchange rates, and interest swap agreements to hedge risks- 18 -

from fluctuations in interest rates in the future.
In addition, the Company never makes use of them for the purpose of speculativetransactions.
(e) Assessment of the effectiveness of hedge accounting
Control procedures of hedge transactions are executed according to eachcompany's bylaw. The effectiveness of the hedge is analyzed by comparing
movements in the fair value of hedged items with those of hedging instruments,
assessed and strictly controlled.
However, the measurement of the effectiveness of interest swap agreements that
conform to the special regulated terms is omitted.
(7)

Amortization of goodwill
Goodwill is amortized on a straight-line basis over its estimated useful life.
trivial goodwill is fully amortized in the fiscal year in which it is incurred.

(8)

However,

Other important matters forming the basis of preparation of consolidated financial
statements
Consumption taxes are treated on a net-of-tax basis.

5.

Changes in accounting policies(Adoption of accounting standard for retirement benefits)
The Company and its domestic consolidated subsidiaries have applied the"Accounting Standard for Retirement Benefits" (ASBJ Statement No. 26 of May 17,
2012; hereinafter, the "Accounting Standard") and the "Guidance on Accounting Standard
for Retirement Benefits" (ASBJ Guidance No. 25 of May 17, 2012; hereinafter, the"Guidance") from the end of the current fiscal year (except for stipulations in Article 35of the Accounting Standard and Article 67 of the Guidance). Under the new standard,
pension fund assets are deducted from retirement benefit obligations and the net amountis recognized as assets for retirement benefits or liabilities for retirement benefits, andunrealized actuarial gains and losses and unrealized prior service costs are recorded asassets for retirement benefits or liabilities for retirement benefits.
In accordance with transitional accounting as stipulated in Article 37 of the
Accounting Standard, the effect of the changes in accounting policies arising from theinitial application is recognized in accumulated adjustments for retirement benefits as acomponent of accumulated other comprehensive income.
As a result of the above, assets for retirement benefits amounted to ¥8,207 million
and liabilities for retirement benefits amounted to ¥2,581 million at the end of the current
fiscal year. Accumulated other comprehensive income decreased by ¥5,373 million andminority interest decreased by ¥418 million.

- 19 -

In addition, net assets per share decreased by ¥35.38 in the current fiscal year.
II. Notes to consolidated balance sheet
1.

Pledged assets and secured obligations
Amount of pledged assets (book value):
Obligations secured by such pledged assets:

Tangible fixed assets¥1,233 million

Total¥1,233 million

Short-term borrowings¥581 million

Long-term borrowings¥981 million

Total¥1,562 million

2. Contingent liabilities
Guarantee obligations¥741 million

III. Notes to consolidated statement of income
Gains on negative goodwill
Gains on negative goodwill are reported because the Company has additionally acquired
the shares of its consolidated subsidiaries Kewpie Egg Corporation, Kanae Foods Co.,
Ltd. and Kewpie Jyozo Co., Ltd. through simplified share exchanges.

IV. Notes to consolidated statement of changes in shareholders' equity, etc.
1. Classes and total numbers of shares issued and outstanding and shares of treasury stock

Number of shares as of December 1, 2013
Increase in the number of shares during the year
Decrease in the number of shares during the year
Number of shares as of November 30, 2014

Class of shares issued andoutstanding
Shares of common stock
153,000,000 shares
153,000,000 sharesClass of shares oftreasury stock
Shares of common stock
3,278,555 shares
23,894 shares
2,169,600 shares
1,132,849 shares(Notes) 1.

The number of shares of treasury stock increased by 23,894 shares during the
fiscal year under review due to an increase of 20,894 shares of treasury stock
attributable to the Company held by an equity-method affiliate as a result of anincrease in the rate of its equity in such equity-method affiliate and an increaseof 3,000 shares of treasury stock as a result of the acquisition ofless-than-one-unit shares.

2.

The number of shares of treasury stock decreased as a result of theappropriation of its shares of treasury stock for the allotment of shares upon
simplified share exchanges to make its consolidated subsidiaries Kewpie Egg
Corporation, Kanae Foods Co., Ltd. and Kewpie Jyozo Co., Ltd. wholly-owned- 20 -

subsidiaries, effective June 2, 2014.
2. Distribution of surplus(1)

Amount of dividends paid(a) At the meeting of the Board of Directors held on January 24, 2014, a resolution was
adopted as follows:・

Matters concerning dividends on shares of common stock

1) Total amount of dividends¥1,647,116,823

2) Amount of dividend per share¥11.003) Record dateNovember 30, 2013

4) Effective dateFebruary 26, 2014(b) At the meeting of the Board of Directors held on June 24, 2014, a resolution was
adopted as follows:(2)・

Matters concerning dividends on shares of common stock

1)

Total amount of dividends¥1,721,970,245

2)

Amount of dividend per share¥11.503)

Record date

May 31, 2014

4)

Effective dateAugust 4, 2014

Dividends the record date of which fell during the fiscal year under review but theeffective date of which will fall during the next fiscal year
A proposition is planned to be submitted to the meeting of the Board of Directors to beheld on January 23, 2015 as follows:・

Matters concerning dividends on shares of common stock

1)

Total amount of dividends¥1,746,901,670

2)

Fund of dividends

Earned surplus

3)

Amount of dividend per share¥11.504)

Record dateNovember 30, 2014

5)

Effective dateFebruary 5, 2015

- 21 -

V. Notes to financial instruments
1.
(1)

Matters relating to the status of financial instruments
Policy in relation to financial instruments:
The Group raises required funds through bank loans and bond issues according to its
equipment investment plan. Floating money is invested in high-security financial
assets and short-term operating funds are provided by bank loans. The Group uses
derivatives to hedge risks, as described below, and has a policy not to conduct
speculative trading.

(2)

Details of financial instruments and related risks:
Trade receivables – trade notes and accounts receivable – are exposed to clients' credit
risks. Securities and investment securities, which principally consist of shares in theclient companies related with the Group's business, are exposed to market risk.
Substantially all of trade payables – trade notes and accounts payable – have payment
due dates within one year. Some trade payables in relation to import of raw materials
are denominated in foreign currencies and exposed to foreign currency risk, which ishedged by using forward exchange contracts when necessary.
Short-termborrowings are funds raised principally in relation to business transactions andlong-term borrowings and bonds are funds raised principally for equipment
investment requirements. Certain funds so raised bear floating interest rates and are
exposed to interest volatility risk, which is hedged by using interest swap agreements,
among others.
Derivatives are forward exchange contracts to hedge foreign currency risk involving
payables in foreign currencies, interest swap agreements to hedge interest volatility
risk relating to borrowings and oil swaps to hedge market risk relating to prices oflight oil and heavy oil. With regard to hedging instruments, hedged items, hedge
policies, the method of assessment of the effectiveness of hedges, etc., please refer tothe above "I. Notes on the matters forming the basis of preparation of consolidated
financial statements: 4. Accounting policies: (6) Signification methods of hedge
accounting".

(3)

Risk management system relating to financial instruments:(i) Management of credit risk:
The Company, through its operation management division and accounting andfinancing division, periodically monitor the conditions of its major clients andmanages the due dates and balances of its trade receivables by client to early
detect or reduce credits that may become uncollectable due to the deterioration of
its financial position or other reasons. Likewise, its consolidated subsidiaries
manage their trade receivables.
With regard to derivatives, the Company perceives very little credit risk as itenters into transactions solely with financial institutions with high ratings.

- 22 -

(ii) Management of market risk:
The Group uses forward exchange contracts to hedge foreign currency risk
involving payables in foreign currencies, interest swap agreements to hedge
interest volatility risk relating to borrowings and oil swaps to hedge market risk
relating to prices of light oil and heavy oil. The Company's risk management
relating to such derivatives is conducted by its Division of Production and
Financial Department pursuant to its internal rules and all of the trading results
are reported to the General Manager of the Financial Department. With regard
to its consolidated subsidiaries, such risk management is conducted principally by
their respective administration divisions and all of the trading results are reported
to the respective directors of the subsidiaries responsible therefor.
With regard to securities and investment securities, the Company periodicallygains information on the market values and financial standings of the issuers(client companies) and review the holding of securities other than those held tomaturity on a continuous basis by taking into consideration the market conditions
and the relationships with the client companies.
(iii) Management of liquidity risk relating to fund-raising:
The Group prepares and revises cash flow projections on a timely basis and keep
current cash flow at a specified level through overdraft agreements with several
banks and a cash management system to manage liquidity risk.
(4)

Supplementary explanation of matters relating to the fair values of financial
instruments, etc.:
The fair values of financial instruments include market prices and reasonably
estimated values if there are no market prices. As the estimation of fair values
incorporates variable factors, adopting different assumptions may change the values.

- 23 -

2.

Matters concerning fair values, etc. of financial instruments
The following table shows amounts for items recorded in the consolidated balance sheet
as of November 30, 2014, along with their fair values and the variances. Items forwhich determining the fair values is recognized as being extremely difficult are notincluded in the table. (See Note 2)(millions of yen)

(1)
(2)

(3)
(4)
(5)
(6)
(7)
(8)
(9)

(*1)
(*2)

Cash and deposits
Trade notes and accounts receivable
Allowances for doubtful accounts (*1)
Securities and investment securities:
Total assets
Trade notes and accounts payable
Short-term borrowings
Accounts payable - otherAccrued income taxes
Bonds
Long-term borrowings
Total liabilities
Derivatives (*2)

Balance sheet
amount34,81581,498(199)
81,29931,765
147,879
53,775
6,481
25,294
5,278
10,0008,010
108,840
84

Fair value

Variance

34,815-81,29932,580148,694
53,775
6,481
25,294
5,278
10,078
7,992
108,902
84

814
814
78
(17)
61
-

Allowances for doubtful accounts of trade notes and accounts receivable areexcluded from the trade notes and accounts receivable.
Net receivables and payables resulting from derivatives are presented in net
amounts.

(Note 1) Matters concerning the calculation method of the fair values of financial
instruments, as well as marketable securities and derivatives:
Assets(1) Cash and deposits and (2) Trade notes and accounts receivable:
The book value is used for these items, as the fair value is nearly equal to thebook value as a result of their short settlement periods.
(3) Securities and investment securities:
The fair value of stocks is determined by the price thereof traded on an
exchange. For bonds, the value is determined by the price on an exchange or
the price announced by the Company's financial institutions. For money intrust or otherwise, the book value is used, as the fair value is nearly equal to thebook value as a result of its short settlement periods.
Liabilities(4) Trade notes and accounts payable, (5) Short-term borrowings, (6) Accounts
payable - other and (7) Accrued income taxes:- 24 -

The book value is used for these items, as the fair value is nearly equal to thebook value as a result of their short settlement periods.
(8) Bonds:
The fair value of bonds with fixed interest rates is calculated from the present
value of the total principal and interest discounted at a rate supposing newly
conducted similar borrowings.
(9) Long-term borrowings:
The fair value of long-term borrowings with fixed interest rates is calculated
from the present value of the total principal and interest discounted at a rate
supposing newly conducted similar borrowings. For long-term borrowings
with floating interest rates, the book value is used, as the fair value is nearly
equal to the book value as a result of the revision of interest rates based on themarket interest rates in short periods. With regard to some long-termborrowings with floating interest rates subject to special processing of interest
rate swaps, the fair value is calculated by discounting the total principal andinterest to be processed together with such interest swaps, at a reasonably
estimated rate supposing conducted similar borrowings.
Derivatives
With regard to derivatives subject to special processing of interest rate swaps, thefair value is indicated by inclusion in the fair value of long-term borrowings to behedged, as they are processed together with such long-term borrowings.
(Note 2) Financial instruments for which determining the market values is recognized as
being extremely difficult:Category
Unlisted shares

Balance sheet amount(millions of yen)
4,802

The item has no market price. Accordingly, as determining the market value isrecognized as being extremely difficult, it is not included in "(3) Securities andinvestment securities".
VI. Notes to leased and other real estate properties
Notes to leased and other real estate properties are omitted as the total amount thereof isinsignificant.

VII. Notes on information per share
Amount of net assets per share¥1,284.36

Net income per share (basic)¥88.69- 25 -

VIII. Notes on material subsequent events
Organization restructuring(Making a company a consolidated subsidiary by company split)
The Company and Aohata Corporation ("Aohata") made a contract of absorption-typecompany split on December 24, 2013, which made Aohata as a successor company of thebusiness of selling bread-related products such as jams, whipped cream and spread, to theCompany by a company split (the "Company Split"), and it became effective on December 1,
2014. As a result of the Company Split, the Company came to own 45.64% of Aohata's
issued shares and Aohata became the Company's consolidated subsidiary because it came tobe under the substantial control of the Company.
1.

Outline of the Company Split(1) Name and description of business of the acquired company(2)a) Name

Aohata Corporationb) Description of business

Production and sale of jams

Main reason of the Company Split
The Company conducted the Company Split because this would enable Aohata tooperate both manufacturing and selling businesses, which would promote its prompt
decision-making, unique selling system and rapid product development inconsideration of diversifying customer needs and changing preferences. It would
also enable the Processed foods business of the Company as a whole to improve
market competitiveness. Both companies agreed to the idea that making Aohata aconsolidated company would contribute to the further growth and development ofthem and to the enhancement of corporate value, because it would lead to many
positive changes, such as the further active utilization of each others' management
know-how as to endless promotion of the rationalization, integration of bothcompanies' sales channels in and outside of Japan, enhancement of partnership
between them in processing fruits, strengthening the Processed foods business andimproving profitability of the Company, and strengthening the management base of
Aohata through further utilizing the management resources of the Company morethan ever.

(3)

Effective date of the Company Split
December 1, 2014

(4)

Legal form of the Company Split
Absorption-type company split that positions the Company as a transferring
company and Aohata as a succeeding company in exchange for shares- 26 -

(5)(6)

Ratios of voting rights owned immediately before the date of the Company Split,
additionally acquired on the date of the Company Split, and owned after theacquisitiona) Ratio of voting rights owned immediately before the date of theCompany Split

36.24%b) Ratio of voting rights additionally acquired on the date of theCompany Split

9.40%c) Ratio of voting rights owned after the acquisition

45.64%

Principal basis for determining the acquiring company
The Company was determined as the acquiring company because the Company
came to exert effective control over Aohata by owning 45.64% of its total voting
rights after the Company Split.

2.

Calculation of acquisition cost
Cost of acquisition of the acquired company and the breakdown of the cost3.

Market value of the common shares held by the Company
immediately before the date of the Company Split

4,229 million yen

Market value of the common shares additionally acquired by
the Company on the date of the Company Split

2,020 million yen

Acquisition cost

6,250 million yen

Amounts of assets acquired and liabilities assumed as of the date of the Company Splitand major components of them
Current assets
Fixed assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

4.

8,800 million yen
5,184 million yen
13,984 million yen
5,093 million yen
546 million yen
5,640 million yen

Outline of accounting treatment applied

In the Company Split, the Company is a transferring company and Aohata is a
succeeding company. However, as Aohata has become the Company's subsidiary, thiscompany split is a reverse acquisition that positions the Company as an acquiring company
and Aohata as an acquired company based on "Accounting Standard for Business
Combinations" (ASBJ Statement No. 21 issued on December 26, 2008) and "Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures" (ASBJ Guidance No. 10 issued on December 26, 2008).

- 27 -

Notes to Non-consolidated Financial Statements
I.

Notes on matters concerning significant accounting policies:

1.

Basis and method of valuation of marketable securities:(1)

Held-to-maturity bonds:

Stated at amortized cost (by the straight-line method)(2)

Capital stocks of subsidiaries and affiliated companies:
At cost, determined by the moving average method(3)

Other securities:
Those with market value:

At market value, determined by market prices, etc. asof the closing of the fiscal year (Revaluationdifferences are all transferred directly to capital.
Selling costs are determined by the moving averagemethod.)Those without market value: At cost, determined by the moving average method
2.

Basis and method of valuation of derivatives:
At market value.
Hedge accounting is applicable to hedge transactions that meet the requirements thereof.

3.
(1)

Inventories:
Basis of valuation:
Merchandise and products, work-in-process and materials and stocks are valued atcost (the value method to devaluate a book value for decreasing profitability).

(2)

Method of valuation:
Merchandise and products, work-in-process and materials and stocks are valued by
the monthly moving average method.

4.
(1)

Method of depreciation of fixed assets:
Tangible fixed assets (excluding lease assets):
Tangible fixed assets, other than those described below, are depreciated using thedeclining-balance method.
The buildings (excluding the improvements thereof) acquired on or after April 1, 1998
are depreciated using the straight-line method.

- 28 -

The bases for periods of useful life and residual values are identical with those
stipulated in the Corporation Tax Act of Japan.
(2)Intangible fixed assets (excluding lease assets):
Intangible fixed assets are depreciated using the straight-line method.
The bases for periods of useful life are identical with those stipulated in the
Corporation Tax Act of Japan.
Software for internal use is amortized by the straight-line method based on theestimated useful life of internal use (five years).

(3)

Lease assets:
Finance lease transactions other than those which are deemed to transfer theownership of leased assets to lessees are calculated by the straight-line method byconsidering the lease period to be useful life and the scrap value to be zero.
Finance lease transactions other than those which are deemed to transfer theownership of leased assets to lessees, which started on or before November 30, 2008,
are accounted for by the same method as that applied to ordinary operating leases.

(4)Long-term prepaid expenses:
Long-term prepaid expenses are depreciated using the straight-line method.

5.
(1)

Accounting for allowances:
Allowance for doubtful accounts:
To provide for losses on bad debts, the Company sets aside an estimated uncollectableamount, by taking into consideration the possible credit loss rate in the future based on
the actual loss rate in respect of general credits, and the individual possibilities ofcollection in respect of possible non-performing credits and other specific claims.

(2)

Reserve for sales rebates:
To provide for payments for sales rebates to be incurred during the current fiscal year,
a reserve for sales rebates is provided based on an accrual basis in accordance with theCompany's policy (rate of the estimated payments for sales rebates to sales).

(3)

Reserve for bonuses:
To provide for the payment of bonuses to employees, the reserves for bonuses areprovided according to the expected amount of the payment which attributes to thecurrent fiscal year.

- 29 -

(4)Reserve for officers' bonuses:
To provide for the payment of bonuses to officers, a reserve for officers' bonuses isprovided according to the estimated amounts payable at the end of the fiscal year
under review.

(5)

Accounting for retirement benefits
To meet the payment of retirement benefits to employees, the Company provides anamount based on estimated retirement benefit obligations and plan assets as of theclose of the said fiscal year.
(i) Periodic allocation method for projected retirement benefits
In calculating retirement benefit obligations, the method of allocating the projected
retirement benefits at the end of the current fiscal year is based on a straight-line
basis.
(ii) Method of accounting for actuarial gains and losses and prior service costs
Prior service costs are amortized by the straight-line method over twelve years
based on the average remaining employees' service years.
Actuarial gains or losses are amortized by the straight-line method over twelve
years based on the average remaining employees' service years at each fiscal year,
and their amortizations start from the next year of the respective accrual years.
In addition, if the amount of pension fund assets exceed that of retirement benefit
obligations for benefit pension plan plus unrecognized actuarial gains or losses forbenefit pension plan, it is provided as prepaid pension expenses on
non-consolidated balance sheet.

6.
(1)

Method of hedge accounting:
Methods of hedge accounting
Deferral hedge is adopted in hedge accounting.
Appropriation processing is adopted for transactions that meet the requirements forthat method.

(2)

Hedging instruments and hedged items:
Hedging instruments: Forward exchange contracts
Hedged items:
Purchase transactions in foreign currencies- 30 -

(3)Hedging policy:
The Company enters into forward exchange contracts to hedge risks from fluctuations
in foreign exchange rates. In addition, the Company never makes use of them for the
purpose of speculative transactions.

(4)

Assessment of the effectiveness of hedge accounting
Control procedures of hedge transactions are executed according to the Company's
bylaw. The effectiveness of the hedge is analyzed by comparing movements in thefair value of hedged items with those of hedging instruments, assessed and strictly
controlled.

7.

(1)

Other important matters forming the basis of preparation of consolidated financial
statements:
Accounting for retirement benefits
The basis for accounting for unappropriated amounts of unrecognized actuarial gains
or losses for retirement benefits and unrecognized prior service costs differs from thebasis therefor under consolidated financial statements.

(2)

Accounting for consumption taxes
Consumption taxes are treated on a net-of-tax basis.

II. Notes to the balance sheet:
1.
2.
3.
4.
5.

(millions of yen)
110,819

Accumulated depreciation of tangible fixed assets:
Contingent liabilities
Guarantee obligations:
Accounts receivable from related companies:
Current assets
Fixed assets
Accounts payable to related companies:
Current liabilities
Accounts payable to Directors and Corporate
Auditors:
Long-term liabilities

631
17,761275
35,248
112

III. Notes to the statement of income(millions of yen)
1. Operating income from related companies:
18,618
2. Operating expenses to related companies:
110,782
3. Amount of transactions other than operating transactions with relatedcompanies:
2,395- 31 -

IV. Notes to the statement of changes in shareholders' equity, etc.
Class and total numbers of shares of treasury stock
Class of shares of treasury stock
Shares of common stock
Number of shares as of December 1, 2013

3,262,107 shares

Increase in the number of shares during the year

3,000 shares

Decrease in the number of shares during the year

2,169,600 shares

Number of shares as of November 30, 2014

1,095,507 shares(Notes) 1.

The number of shares of treasury stock increased during the fiscal year underreview as a result of the acquisition of less-than-one-unit shares.

2.

The number of shares of treasury stock decreased during the fiscal year underreview as a result of the appropriation of its shares of treasury stock for the
allotment of shares upon simplified share exchanges to make its consolidated
subsidiaries Kewpie Egg Corporation, Kanae Foods Co., Ltd. and Kewpie
Jyozo Co., Ltd. wholly-owned subsidiaries, effective June 2, 2014.

- 32 -

V. Notes on tax effect accounting
The principal details of deferred tax assets and liabilities are as follows:(millions of yen)
Deferred tax assets (current)
Reserve for sales rebates
Accrued enterprise taxes
Accrued social security premiums
Others

253
190
121
349

Subtotal of deferred tax assets (current)

914

Valuation reserve(29)

Total deferred tax assets (current)
Deferred tax assets (fixed)

884

Amount of trust of employee retirement benefits createdGains on trust of employee retirement benefits
Losses on impairment of fixed assets
Gains on valuation of investment securities
Others

1,262
382
208
207
531

Subtotal of deferred tax assets (fixed)
Valuation reserve

2,593
(679)

Total deferred tax assets (fixed)

1,913

Total deferred tax assets

2,798

Deferred tax liabilities (long-term)
Prepaid pension expenses
Reserve for deferred tax on replacement assets
Revaluation difference of other securities, etc.
Others(5,046)(1,264)(2,699)(18)

Total of deferred tax liabilities (long-term)(9,028)

Total deferred tax liabilities(9,028)Net deferred tax income (liabilities)(6,230)- 33 -

VI. Notes on transactions with related parties
1.

Parent company, leading corporate shareholders, etc.:(millions of yen)
Category

Company whose
director(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Company whose
director(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Corporate
nameNakashimato
Co., Ltd.
(Note 3)

Touka Co.,
Ltd.
(Note 4)Address

Shibuya-ku,
TokyoShibuya-ku,
Tokyo

Capital
stock

50

100

Principal
business

Sales ofvariousprocessed
foods

Business ofrenting
property/
Leasingbusiness

Ratio of voting
rights owned by
the Company(owned in the
Company)

Direct: 11.6%
Direct: 14.2%
Indirect: 7.8%

[Direct 7.8%]

34

Relationship
Number ofinterlocking
officers

Director:
3 persons

Director:
1 personBusinessrelationship

Purchase of
products,
sales ofgoods andproducts andpayment ofbrand use
fees

Rent of theoffice, etc.
and purchaseof lease
assetsTransaction

AmountPurchase of
products

482

Sale of goods
and products

46

Payment ofbrand use fees
Lease ofproperty
Share exchange

Rent ofproperty

Purchase oflease assets

780

Account

Accounts
payable trade
Accounts
receivable trade
Accounts
payable otherEnd of
year

64

5

0

12
3,128

220

22

Guarantee
money
deposited
Accounts
payable other
Other current
liabilities
Other
long-term
liabilities

184

0
15

33

Category

Company whose
director(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Company whose
director(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Corporate
name

Tou Kewpie
Co., Ltd.

Address

Chofu,
Tokyo

Capitalstock

10(Note 5)

Tou AdKewpie Co.,Ltd.

Shibuya-ku,
Tokyo

4

Principal
business

Mail-orderbusiness

Servicebusiness

Ratio of voting
rights owned by
the Company(owned in the
Company)

Direct:

40.0%

None

(Note 4)35

Relationship
Number ofBusinessinterlocking
relationshipofficers

Employee:
4 persons

Employee:
1 personSales ofgoods andproducts,
payment ofsales
promotion
cost andlease ofproperty

Payment ofadvertisingexpense andsales
promotion
cost, andsales ofgoods andproducts

Transaction

Sale of goods
and products
Payment ofsales promotion
cost
Underwritingof capitalincrease by
third-party
allocation
Payment ofadvertisingexpensePayment ofsales
promotion
cost
Sale of goods
and products
Purchase of
tangible
fixed assets

End ofyear

AmountAccount

427

Accounts
receivable trade98

36

Accounts
payable other6

Accounts
payable other

1,465

Accounts
receivable trade

52

171

6,969

116

241

17

Category

Company whose
director(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)
Company whose
director(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)
Company whose
director(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Corporate
nameMinatoShokai, Co.,
Ltd.

Address

Capitalstock

Principal
business

Ratio of voting
rights owned by
the Company(owned in the
Company)

Minato-ku,
Tokyo

10

Wholesaleof liquors
and foods

None(Note 4)Tou Solutions
Co., Ltd.
(Note 6)

Yu ShokaiCo., Ltd.
(Note 7)

Shinjukuku, Tokyo

Shibuya-ku,
Tokyo

90

10

Plan,
development,sale,maintenanceand operations Direct:
support ofcomputersystems

Business ofrenting
property

20.0%

None

36

Relationship
Number ofBusinessinterlocking
relationshipofficers

None

Employee:
1 person

None

Sales ofgoods andproducts

Outsourcing
ofcomputingwork

Rent of theofficeTransaction

AmountAccount

End ofyear

Sale of goods
and products

137

Accounts
receivable trade

28

Payment of
IT-related
expense1,879

Accounts
payable other

359

Purchase ofsoftware632

Purchase of
tangible fixed
assets16

Payment ofrental fees

96

Guarantee
money
deposited

117

Category

Company whose
director(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Corporate
nameAddress

T&A Co., Ltd. Shibuya-ku,
Tokyo(Note 8)

Capitalstock

Principal
business

Ratio of voting
rights owned by
the Company(owned in the
Company)

100

Business ofrenting
property[Direct:

1.3%]

Relationship
Number ofinterlocking
officers

BusinessrelationshipTransaction

AmountDirector:
1 personRent of thedormitory

Rent of realestate65

Account

End ofyear

Terms of transactions and the policy on determination thereof:(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)

In principle, the terms of all transactions are determined individually upon consultation by reference to market prices, etc., as with othertransactions in general.
With regard to the above-listed transaction amounts, the amount of ending balance includes consumption taxes but the transaction amount
does not include consumption taxes.
Amane Nakashima, Senior Executive Managing Director of the Company, and his close relatives and the company in which they own amajority of voting rights directly own 82.9% of the voting rights of the relevant company.
The share exchanges were made to make its consolidated subsidiaries Kewpie Egg Corporation, Kanae Foods Co., Ltd. and Kewpie Jyozo
Co., Ltd. wholly-owned subsidiaries. The share exchange ratios were determined upon consultation among the parties thereto, byreference to the result of calculations of their share values by a third party. The transaction amount listed above was calculated on thebasis of the market price of the stock of the Company on the effective date thereof.
The company in which Amane Nakashima, Senior Executive Managing Director of the Company, and his close relatives own a majority ofvoting rights directly owns 100.0% of the voting rights of the relevant company.
The company in which Amane Nakashima, Senior Executive Managing Director of the Company, and his close relatives own a majority ofvoting rights directly owned 60.0% of the voting rights of the relevant company. However, as a result of the underwriting by theCompany of a capital increase by third-party allocation made by Tou Kewpie Co., Ltd., Tou Kewpie Co., Ltd. has become a consolidated
subsidiary of the Company. The underwriting price for the capital increase by third-party allocation was determined upon consultation

37

(Note 6)(Note 7)(Note 8)among the parties thereto, by reference to the result of calculations of their share values by a third party. The transaction amount listed
above relates to the transactions for the period during which it fell under the category of a company in which the Company's director(s)and his/her close relative(s) own a majority of the voting rights. The ratio of voting rights owned by the Company (owned in the
Company) and the end-of-year amount listed above are shown by those as of the end of the period during which it fell under the categoryof a company in which the Company's director(s) and his/her close relative(s) own a majority of the voting rights.
The company in which Amane Nakashima, Senior Executive Managing Director of the Company, and his close relatives own a majority ofvoting rights directly owns 80.0% of the voting rights of the relevant company.
Amane Nakashima, Senior Executive Managing Director of the Company, and his close relatives directly own 100.0% of the voting rightsof the relevant company.
Amane Nakashima, Senior Executive Managing Director of the Company, and his close relatives directly own 89.5% of the voting rightsof the relevant company.

38

2.

Subsidiaries, etc.:(millions of yen)
Category

Subsidiary

Trade nameKewpie Egg
Corporation

Address

Chofu,
Tokyo

Subsidiary

Kanae Foods
Co., Ltd.

Chofu,
Tokyo

Subsidiary

SALAD CLUBINC.

Chofu,
Tokyo

Subsidiary

GourmetDelica Co.,
Ltd.

Tokorozawa,
SaitamaCapitalstock

Principal business

350

Production and saleof liquid eggs,
frozen eggs, etc.

50

Production and saleof processed eggs,
including egg
spread, thick omelets
and shredded eggs

300

Processing and saleof fresh vegetables

98

Production and saleof delicatessen
products

Ratio of voting
rights owned by
the Company(owned in the
Company)
Direct:Direct:Direct:Direct:Relationship
Interlocking
directors

Operatingtransaction

Transaction

AmountAccount

Sales of goods
Director: and products
2 persons
Employee: and purchase
10 persons of products
and materials

Borrowingof fund100.0%

Director:
2 persons Purchase of
Employee:products
4 personsPurchaseofproducts

Accounts
16,691 payable trade

51.0%

Director:
2 persons
Employee:
3 personsSale ofmaterials

Borrowingof fund
Payment
of interest

2,166 Short-termborrowings
15

100.0%

Director:
2 persons
Employee:
8 personsSale ofmaterials

100.0%

Payment
of interest

Lending offund

Receipt
of interest

Short-term
4,155 borrowings

End of
year

5,643

30

3,179 Short-term
loans

3,101

2,714

4,620

31

Terms of transactions and the policy on determination thereof:(Note 1)
(Note 2)
(Note 3)

The terms of purchases of products are determined individually upon consultation by reference to market prices, etc., as with othertransactions in general. Interest on loans and borrowings are determined reasonably in consideration of market interest rates.
Loans and borrowings are associated with fund management under the cash management system. The transaction amounts thereof are
shown by the average outstanding loans and borrowings.
With regard to the above-listed transaction amounts, the amount of ending balance includes consumption taxes but the transaction amount
does not include consumption taxes.

39VII. Note on information per share
Net assets per share:
Net income per share:¥970.75¥45.78

VIII. Notes on material subsequent events
Organization restructuring(Making a company a consolidated subsidiary by company split)
The Company and Aohata Corporation ("Aohata") made a contract of absorption-typecompany split on December 24, 2013, which made Aohata as a successor company of thebusiness of selling bread-related products such as jams, whipped cream and spread, to theCompany by a company split (the "Company Split"), and it became effective on
December 1, 2014. As a result of the Company Split, the Company came to own
45.64% of Aohata's issued shares and Aohata became the Company's consolidated
subsidiary because it came to be under the substantial control of the Company. The
details thereof are described in "Notes to Consolidated Financial Statements: VIII. Notes
on material subsequent events".
IX.

Note on company adopting consolidated dividend rules
The Company is a company adopting consolidated dividend rules.

(Note) Figures are stated by discarding fractions of one million yen. The ratios of voting
rights held by (in) the Company are stated by counting fractions of 1/2 or more of
their units as one and discarding the rest.

40